13 April 2006
The decision by a UK watchdog to set a limit on the amount credit card companies can charge customers who default on payments could reduce the number of 0% interest introductory offers, according to a market research firm.
Defaqto said that most credit card firms would have to reduce their charges as a result of the demand from the Office of Fair Trading (OFT).
The OFT recently demanded card firms limit charges for late payments, returned payments and exceeding credit limits to £12 or face the threat of legal action.
David Black, head of banking at Defaqto, said: "The vast majority of cards charge £20 or £25 for default payments so this ruling is likely to have a major impact on the revenues of credit card companies.
"To compensate for this we can expect some of the benefits offered when taking out credit cards to be further reduced and this may also impact upon the availability of 0% introductory offers and will increase standard interest rates further down the line."
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